CANADA DATA: Autos Lead Declines in Nov Factory And Wholesale Sales

• MNI: US REDBOOK: DEC STORE SALES +5.9% V YR AGO MO
• US REDBOOK: STORE SALES +6.2% WK ENDED DEC 13 V YR AGO WK

Initial dovish reaction to the uptick in the unemployment rate and soft AHE readings countered by the fact that the unrounded unemployment figure (4.564%) was a ‘low’ 4.6%.

• Elsewhere, the firmer-than-expected headline NFP reading and caution after the recent BLS notice flagging changes to statistical weights for the November household survey estimates, which will result in November labor force estimates having "slightly higher" variances than usual, further temper the initial market reaction.
• A firmer-than-expected control group reading on the retail sales release may also be factoring in.
• FOMC-dated OIS still prices ~6bp of easing for January, little changed vs. pre-NFP levels. 58bp of easing is priced through ’26 on the whole after a couple of spikes above 60bp during the initial reaction to NFPs.
• SOFR futures now flat to +2.0 through the blues. Implied terminal rate pricing moves to ~3.115% vs. 3.135% ahead of the NFP release, briefly hitting 3.035% in the wake of the data.
• The modest hawkish move that followed the weekly ADP employment print has been reversed.

• Despite the higher-than-expected headline NFP change of +64k, the -105k adjustment in October certainly dampens the release. Additionally, the above consensus unemployment rate at 4.564% and lower-than-expected AHE contribute to the immediate extension lower for the US dollar.
• However, with the known uncertainty around the release, the low unrounded U/E rate, and specific focus on DOGE deferred resignations, the initial market reactions across the currency space were short-lived. Furthermore, with similarly important inflation data due Thursday, the bar for a meaningful dollar breakout may be high across the next 48 hours.
• USDJPY printed 154.40 following the release, trading to within 5pips of the December 05 low. However, the reversal higher for US yields has supported a 40 pip bounce for the pair in most recent trade. Overnight highs reside at 155.25 should the market be inclined to pressure short-term positioning.
• For GBPUSD, the initial spike higher to 1.3456 also fell short of the October 17 high at 1.3471, and spot is now 40 pips off the highs.